When the actual rate of unemployment is less than the natural rate of unemployment, the economy
a. operates at an output greater than its long-run potential.
b. operates at its maximum sustainable output.
c. must also be experiencing stable prices (zero inflation).
d. operates at an output less than its long-run potential.
A
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Suppose that C = Ca + 0.6y and a shock decreases Ca by $50 billion. Assuming there is no government involvement, by how much will equilibrium GDP decrease?
What will be an ideal response?
If penalties are imposed only on the buyers of illegal drugs, the equilibrium price of illegal drugs will ________ and the equilibrium quantity will ________
A) rise; increase B) rise; decrease C) fall; increase D) fall; decrease
The GDP measures the value of
a. final goods and services. b. intermediate goods only. c. final goods only. d. services only.
______ identifies all of the input combinations that efficiently produce a given amount of output.
A. A production function B. An efficient production frontier C. A production possibilities curve